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  • Pound among top performers in Europe, on a quiet day for markets
  • Cable remains supported by the 20-day moving average.

The GBP/USD is rising on Tuesday after falling during the previous three trading days. During the American session, it printed a fresh daily high at 1.3078 and then pulled back modestly, holding above 1.3060.

The US dollar is posting modest losses across the board affected by a decline in US yields and unable to benefit from better-than-expect US economic data. In Wall Street stocks are mixed. The resurgence in COVID-19 cases is creating concerns among market participants.

With no Brexit headlines, the pound outperformed in Europe. The currency continues to be driven by negative rates speculations from the Bank of England, COVID-19 cases and Brexit. “We are becoming increasingly confident that the lift the pound would derive from a Brexit deal being confirmed is likely to be modest. Yesterday was a good example of some good news failing to provide much lift at all for GBP. The decision of Michel Barnier to remain in negotiations in London through tomorrow was viewed as a positive sign by the UK government yet it failed to register in the FX markets”, explained MUFG Bank analysts.

Levels to watch

The correction from levels near 1.3200 in GBP/USD found support above the 20-day moving average that stands at 1.2980. A daily close clearly below would suggest more losses ahead with the next strong support seen at 1.2860 followed by the October low at 1.2815.

On the upside, 1.3080 is again a resistance level to consider, followed by the strong barrier of 1.3150; a close above would point to more strength ahead for the pound.